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date: 19 December 2018

Assessing the State of Top Management Teams Research

Summary and Keywords

Since the earliest days of strategic management research, scholars have sought to measure and model the effects of top managers on organizational performance. A watershed moment in this effort came with the 1984 introduction of Hambrick and Mason’s upper echelon view and their contention that firms are a reflection of their top management teams (TMT). An explosion of research followed and hundreds, if not thousands, of manuscripts have since been published on the subject. While a number of excellent reviews of this extensive literature exist, a relative few have asked questions about the overall state and future of the field. We undertook this assessment in an effort to answer some key questions. Are we still making progress on the big questions that gave rise to the upper echelon view, or have we reached a point of diminishing returns with this stream of research? If we are at an inflection point, what are the issues that should drive future inquiry about top management teams?

Since Hambrick and Mason’s seminal work in 1984, the upper echelon view of top management teams (TMTs) has spawned an ever-growing body of research and has evolved to be one of the more influential theories in strategic management. Top management team research has investigated a range of topics related to the composition and processes of TMTs, executive compensation, selection and tenure, leadership, conflict and decision making, and a host of other related outcomes. Hundreds of studies involving TMTs (at the writing of this paper, over 7,200 works have cited Hambrick & Mason, 1984) have yielded a variety of interesting findings. Nevertheless, there have been many inconsistencies among these findings, and a variety of concerns and problems remain.

Despite these issues, TMT research has generated a wealth of valuable discoveries and conclusions, while at the same time fostering numerous opportunities for new research. As such, it is no surprise that TMTs continue to stoke scholarly curiosity. One issue about which there is growing curiosity is the marginal value of future research. To phrase the issue bluntly, is there new value in this stream, or have we reached a point of diminishing returns? Are there important and new questions that we have yet to answer, or is it time to consolidate our gains and turn our attentions elsewhere? While many have hinted at these questions, in discussing the limitations of specific studies or in offering suggestions about future opportunities, few have addressed the issue quite so directly. Are we at an inflection point in the evolution of the upper echelon view and, if so, is the research stream ripe for new growth or is it ready to taper off?

These are the sorts of questions that prompt our musings about TMT research, about the upper echelon perspective, and about the prospects for new learning going forward. What follows then is a brief discussion of the origins and evolution of the upper echelon view, along with the stream of TMT studies that have followed. The basic tenets of the model and the general findings of TMT research are discussed. We conclude by considering the state of the field, along with the challenges and opportunities that lie ahead.

Origins and Basic Tenets

The recognition and study of a group of individuals at the apex of strategic decision making in organizations began in the 1960s, with references to the groups of top managers, identified as dominant coalitions (Cyert & March, 1963), or inner circles (Thompson, 1967). While, arguably, the chief executive (CEO) of an organization wields the majority of influence as both a strategist and a figurehead, it has been recognized for decades that including the “elite” top managers who drive strategy throughout the structure and operation of an organization has more predictive value over organizational outcomes than that of the CEO alone (Hage & Dewar, 1973). What is more, the study of groups of top managers draws upon the related behavioral theories of the Carnegie School (Cyert & March, 1963; March & Simon, 1958), that complex decision making is the outcome of idiosyncratic behavioral factors, rather than mere economic maximization.

Central to the examination of TMTs are two general observations. First, while the CEO of an organization is usually the most visible and influential executive, the CEO alone is limited in time and cognitive ability and therefore must rely upon a dominant coalition of executives for a more complete strategic analysis of the environment and organization. Second, the formulation and implementation of strategic decisions, which determine how the organization acts, reacts, and deploys resources, is determined by that dominant coalition of individuals, who are then also responsible for the further integration of their decisions throughout the organization’s structure.

The upper echelon (UE) view of the firm (Hambrick & Mason, 1984) introduced the basic idea that an organization’s strategy, structure, and performance are a reflection of its top team of managers; that the cognitions and values of a TMT link directly to observable characteristics such as individual demography, experience and education; and that these, in turn, influence the strategy, structure, and performance (Carpenter, Geletkanycz, & Sanders, 2004). Therefore, one source of variance in determining the performance outcomes of the organization is the unique combination of abilities on an organization’s TMT. This is the basic theory that has given rise to so much research regarding the composition, structure, conflict, and behavior of top management teams. While the body of TMT research is deep and wide, and while a number of thorough reviews exist already, some of the general findings are highlighted in the section that follows.

General Findings

Two broadly accepted assumptions underlie the whole of TMT research: first, that top managers make strategic decisions based upon their perceptions and interpretations of events and information; and second, that their cognitive schema are a function of individual characteristics such as their values, backgrounds, and experiences (Hambrick, 2007; Hambrick & Mason, 1984). It is generally understood that these observable TMT characteristics do not influence organizational performance directly. Rather, the idea is that these characteristics interact among the members of the TMT to create a collective cognitive schema that drives strategic choice, and those choices influence organizational performance. This perspective is supported theoretically by the behavioral theory of the firm (Cyert & March, 1963). Plenty of findings have bolstered the basic model, albeit with mixed consistency. Further refinements have attempted to enhance the predictive strength of the model by including (a) the discretion afforded to the TMT, either as a function of CEO dominance or from environmental constraints; and (b) the amount of social and behavioral integration within the TMT. Intuitively, these make sense. The more control afforded the TMT, and the more they interact, the more their collective cognitive schema will be reflected in their choices and in the performance of the firm. A number of works have provided excellent and comprehensive reviews (Bromiley & Rau, 2016; Carpenter et al., 2004; Finkelstein & Hambrick, 1996; Finkelstein, Hambrick, & Cannella, 2009).

Building from these basic assumptions, the bulk of TMT research has focused on three interrelated constructs: the composition of the TMT, the interactional processes of the TMT, and the organizational outcomes that reflect the TMT. Generally speaking, the relationship between TMT characteristics and firm performance has been established. As mentioned though, the results have been inconsistent and highly contextual (Haleblian & Finkelstein, 1993). The cognitive diversity engendered by heterogeneous teams results in a broader awareness of strategic questions, a larger selection of strategic options, and the ability to manage more complex decision making. On the other hand, larger and heterogeneous TMTs also struggle with socio-cognitive conflict, which can deter from consensus building and strategy implementation (Amason, 1996; Amason & Sapienza, 1997). Findings establishing the relationships between job-related and functional diversity and outcomes have been less contradictory (Horwitz & Horwitz, 2007; Joshi & Roh, 2009; Marcel, 2009). In spite of recent calls for further examination of the determinants of the heterogeneity of TMT characteristics (Finkelstein, Hambrick, & Cannella, 2009), little research has been conducted in this area.

However, research has also supported the opposite blade of the double-edged sword of findings associated with TMT heterogeneity. Several studies have established that TMT tenure heterogeneity is associated with greater TMT turnover (Jackson et al., 1991; Wagner, Pfeffer, & O’Reilly, 1984). Geletkanycz and Hambrick (1997) demonstrated that diversity of extra-industry ties among TMT members is associated with boundary spanning, information gathering, and enhanced firm performance. Yet, Bermiss and Murmann (2014) found that firms that experience the departure of TMT members whose functional role is externally focused fare better than firms that lose TMT members whose functional roles are internally focused, results that seem to contradict the importance of heterogeneity based upon external relationships. Similarly, Amason et al. (2006) found that TMT heterogeneity was negatively related to performance in more novel new ventures. Adding further to the inconsistency of findings, a meta-analysis conducted by Homberg and Bui (2013) showed no effect at all between TMT diversity and performance outcomes, and raised the question of publication bias in TMT research.

An interesting body of work in recent years has examined the gender composition of the TMT. These studies have found that the proportion of females comprising the TMT is positively related to entrepreneurial outcomes and firm innovativeness (Dezsö & Ross, 2012; Lyngsie & Foss, 2016). Considering the opposite edge of the sword, research also indicates that TMT gender diversity is related to merger-and-acquisition pre-integration performance, but negatively related to post-integration performance (Parola, Ellis, & Golden, 2015).

A number of processes within TMTs have been examined, such as conflict, information seeking, social and behavioral integration, consensus forming, and advice seeking. In the two decades since their publication, the findings from Amason (1996) and Amason and Sapienza (1997) continue to find support in various contexts. These studies established that TMTs benefit in a number of ways from cognitive conflict, such as decision quality and affective acceptance, while affective conflict erodes those benefits (Amason, 1996). Larger and more heterogeneous TMTs are characterized by greater levels of conflict (Amason & Sapienza, 1997). Relatedly, teams that interact more together (behavioral integration) experience better decision making and less organizational decline (Carmeli & Schaubroeck, 2006). Consistent with these findings, Cannella, Park, and Lee (2008) found that TMTs that are located near one another, in collocated offices, experienced an enhanced relationship between TMT heterogeneity and performance outcomes. Alexiev, Jansen, Van den Bosch, and Volberda (2010) found that heterogeneous TMTs were better able to leverage internal advice seeking in pursuing innovation than more homogeneous TMTs.

Power dynamics within teams has been among the more recent emphases of TMT research. Finkelstein (1992) was the first to empirically demonstrate that power is not equal among all team members. Since then, a number of studies have supported power distribution as a substantial determinant in the relationship between TMT characteristics and outcomes. Pitcher and Smith (2001) suggested that power distribution among the TMT was dependent upon the discretion of the CEO. When the CEO welcomed TMT strategic input, TMT heterogeneity influenced outcomes. When the CEO did not welcome input, TMT characteristics were not influential. Mooney and Amason (2011) found that the CEO’s “inner circle” of executives with whom they integrated the most was smaller than the formal group of top managers listed in public filings. Similarly, Roberto (2003) found that a small number of executives formed a “stable core” who were consistently involved in strategic decision making. In an interesting study of the interface between CEOs and TMTs, Cao, Simsek, and Zhang (2010) found that small-to-medium sized enterprises pursued a more ambidextrous orientation when CEOs with more extensive networks communicated richly with their TMTs and when the CEO-TMT relationship was characterized by power decentralization.

One interesting development in the last decade has been the increasing consideration of TMT research in the context of new ventures (Amason et al., 2006; Ensley & Hmieleski, 2005; Hmieleski & Ensley, 2007; Kroll, Walters, & Le, 2007; Souitaris & Maestro, 2010; Zimmerman, 2008). Previously, much of the TMT research had taken place in older, more established, and publicly traded firms, for which objective and accessible data is readily available. In such organizations, which are typically larger and more bureaucratically complex, the linkage between the TMT and organizational outcomes is much more confounded. In younger, smaller firms, the effect of the TMT on organizational outcomes is more readily identified. For example, Amason et al. (2006) found that TMT heterogeneity in more novel new ventures (those ventures that introduce a new product or service category to the market) was negatively related to firm performance. This suggests that, while more diverse teams may be better at environmental scanning, more homogenous teams in these types of new ventures were possibly better able to integrate and communicate, which are necessary capacities for novel and innovative firms. Likewise, Hmieleski and Ensley (2007) found interactive effects between leadership type, environmental dynamism, and TMT heterogeneity in fast growing startups.

Similarly, research in small to medium-sized enterprises (SMEs) also allows processes and outcomes to be more easily identified. For example, Lubatkin, Simsek, Ling, and Veiga (2006) found in SMEs that organizational dexterity—the ability of a firm to explore opportunities and exploit them—was a function of TMT behavioral integration. Likewise, Cao et al. (2010) found that this was enhanced when the CEO decentralizes power among TMT members.

In consideration of more contextual research on TMTs, as well as examining processes within TMTs, Menz (2012) offers a thorough review of the more recently developing stream of research on functional members of the TMT. This research often focuses upon individual members of the TMT representing various functional areas (e.g., CFO, CIO, CTO, etc.), but also examines the processes of those individuals’ involvement in TMT strategy formulation and implementation, and generally supports the upper echelon perspective that TMT characteristics affect firm strategy.

Persistent Challenges

Despite the depth and breadth of TMT research, along with the general support of the model, a number of persistent problems remain. Far more research “lists” these limitations rather than addresses them. Research projects designed to investigate the black box of TMT processes require access not easily gained, along with more time and money than most academic researchers can afford to invest. In addition, the sort of personal involvement by TMT members that could provide rich data and insight into actual TMT processes is difficult, if not impossible, to acquire. Indeed, few researchers have direct access to large numbers of TMTs, as necessary to build representative samples and produce widely generalizable findings. So, there are some practical limitations on the ability of researchers to view, manipulate and measure key elements in the model. There are also areas though where the theory is simply underdeveloped or where the momentum of the research stream has outpaced the agreement of the researchers. We list three of those areas below.

Definition

Among one of the most enduring challenges of TMT research is the conceptual definition of the TMT. While research indicates that the examination of the top group of managers provides more predictive value than that of the CEO alone, determining how one actually defines the top team of managers has been inconsistent and problematic. Among the most prevalent reasons for this persistent problem is the difficulty of collecting TMT data. Because response rates by executives for primary research, such as surveys and interviews, is low for obvious reasons, such as busy schedules and their saturation with requests for responses to questions, obtaining primary data about actual cognitive and value characteristics is highly difficult (Cycyota & Harrison, 2006; Hambrick, 2007). So, researchers are forced to rely on proxy data about educational and industry background and experience, as well as demographic and socioeconomic variables, from publicly available company reports. As such, TMTs are often defined based on the availability of this data for publicly traded firms. This data becomes even more challenging to acquire for private firms and other organizations not required to publicly report this information.

Contributing to persistent challenges in TMT research, often brought about by the accessibility of publicly available data, is the troublesome assumption that demographic variables can appropriately serve as proxies for the underlying cognitive processes among the TMT. Priem, Lyon, and Dess (1999) called attention to the shortcomings of relying too heavily upon publicly available demographic data variables as proxies, pointing out that demographic proxies cannot reliably indicate which, or how, cognitive processes affect outcomes. Further, they warned that reliance upon demographic proxies reinforces the observation distance between researchers and actual TMT phenomena. A later study by Kilduff, Angelmar, and Mehra (2000) supported these contentions. More recent TMT research has begun to examine the underlying psychological constructs once proxied by demographic measures.

The most prevalent definitions of the TMT in published studies are: the highest paid three or five executives, the entire executive team published in company reports, the CEO and all internal board members, all executives with a title higher than or equal to a given title (for example, executive vice president), those defined by the CEO as the top or most influential decision makers, or all founding team members when TMT research is applied to entrepreneurship contexts. It becomes obvious that using more than one of these definitions applied to the same company could yield multiple configurations for sampling TMTs. A few studies have applied multiple definitions in the same study, reporting results for various configurations (Carpenter & Fredrickson, 2001; Jensen & Zajac, 2004).

While it seems most appropriate to examine TMTs in whatever definitional configuration is best suited to the research question, very few studies offer a theoretical rationale explaining the suitability of the selected definition for the study. The assumption that the individuals for which information is readily or publicly available are actually those most responsible for strategic analysis and choice within the organization is dubious at best. Additionally, varying definitional configurations of the TMT, combined with a plethora of constructs of interest and dependent variables, have contributed to highly contextualized and inconsistent findings, further confounding the establishment of a robust understanding of TMTs. Research studies could be strengthened not only by offering a justification for why certain executives were chosen to be included on the TMT, but also by examining further robustness checks for varying definitional configurations of the TMT.

Power of the Team

As TMT research developed, it became increasingly clear that one assumption to be suspended or clarified was the nature of the “team” itself. Are TMTs teams, in the truest sense of the word, as a cohesive group of individuals pursuing a common vision, or are they coalitions pursuing their fragmented functional expertise in a balance of organizational goals dictated by boards and CEOs, and their own self-interests? Do they communicate on a regular basis about common themes, as a team? Or do they meet infrequently, or in varying spheres of membership, as task-forces, to be realigned differently for the next strategic decision? These distinctions are important with regard to the generalization of findings of TMT research.

Hambrick (1994) suggested that perhaps the best description of the upper echelon, or dominant coalition, should be top management groups rather than teams. Indeed, this term better accommodates the uncertainty that publicly available proxy variables, such as age, tenure, educational background, and others, actually describe the inner processes of a cohesive, singularly minded team. Additionally, our own exposure to top managers informs us that power and influence among TMT members is differentially distributed. All TMT members are not alike, and, further, each strategic decision may bring a different sub-group of top managers into focus. This exposes another challenge of TMT research: the actual distribution of power and influence among those defined as TMT members.

The scope of responsibility, power, and influence can vary widely across various TMT members due to a variety of external and internal influences. For example, the Sarbanes-Oxley act of 2002 requires that CEOs and CFOs assume personal responsibility for the accuracy of accounting reports in publicly traded firms. This level of responsibility no doubt changes the scope of the power and influence those two executives have over certain accounting functions within a firm. At the same time, it is intuitive to think that the CFO might have relatively less power or influence over decisions of new product innovation or market positioning strategies than the vice presidents of R & D or the brand divisions. Finkelstein (1992) asserted that TMT research should better consider the differences in the distribution of power and influence. This argument is further validated by a study conducted by Mooney and Amason (2011), which found that the group of top executives identified by the CEO as being the ones most involved in actual strategic decisions was a different, and significantly smaller group (on average 4.6 individuals), than those listed in public documents as the top managers (on average 9.4 individuals). This suggests that the number of executives who actually have the attention of the CEO with regard to the assessment and choice of strategic alternatives differs from those who may be the top earners or listed in public filings with a certain title. These effects may differ across contexts (e.g., Cao et al., 2010), and in different cultures outside the United States. For example, one study conducted with TMTs in hospitals found that performance was more positively influenced when there was a power differentiation among TMT members, with the more powerful group being the CEO and one other TMT member with different functional and industry backgrounds (Smith, Houghton, Hood, & Ryman, 2006).

With this in mind, future research should explore further the black box of processes by which power among TMT members is distributed and whether or not power is distributed consistently across different decisions. Is the inner core of powerful TMT members relatively stable across all decisions, or is it distributed differently based upon certain episodic needs of the organization? Further, it would be worthwhile to explore how power is distributed differently in public, private, and family firms, and how CEOs signal to internal and external stakeholders how power is being distributed. In considering two examples from popular business media, Steve Jobs, the former CEO of Apple, publicly lauded his Chief Design Officer, Jony Ive. Similarly, Mark Zuckerberg, the CEO of Facebook, has publicly credited his COO, Sheryl Sandberg, with the refinement of the organization’s revenue model. Neither of these top executives is the CEO of their firms, and yet both have become celebrity executives, in their own right, a rare feat for non-CEO TMT members.

Direction of Causality and Endogeneity

The last of these persistent issues that we will mention is the causality assumed by the model and implied in our research. Most of the studies are cross sectional examinations of the relationships between TMT characteristics and organizational outcomes. Unfortunately, cross sectional methodologies, while they offer snapshots of relationships between TMT constructs of interest, do not explain well the nature of the causality. While it is certainly conceivable that configurations of TMT characteristics, such as functional backgrounds in finance, can explain a greater prevalence of acquisition behavior, it is also likely that a firm with a broad directive and CEO vision for growth through acquisitions could configure a TMT with an expertise in financing those endeavors, and likewise attract executives with that expertise (Hambrick, 2007). A study of TMT characteristics and M&A (mergers and acquisitions) behavior could provide evidence of such a relationship without providing a deep understanding of the actual causal order, or the actual reason behind the relationship. However, longitudinal studies of TMTs are rare, and endogeneity checks are still infrequently noted in TMT research.

Are We Any Better Off?

So, having reviewed the basic elements of the perspective, some of the strongest and most consistent findings, along with some of the most persistent problems, we come again to the question. Have we come to an inflection point? With the benefit of some 30 years of retrospect, can we now assess the progress made on the issues that spawned the upper echelon perspective and the long stream of literature that followed? Have the results been worth the effort? After hundreds of articles, books, and chapters have been published; perhaps thousands of individual manuscripts written, reviewed, and revised; and many thousands of hours spent by authors, reviewers, editors, and readers, is the payback still worth the investment?

Looking backwards and assessing where we are today, in relation to where we were before, the answer would have to be yes, and many times over. As discussed previously, the original premise of the upper echelon perspective (Hambrick & Mason, 1984) was that natural limits on the ability of people to consider and choose in complex situations would lead to decisions that reflected the backgrounds, experiences and values of the decision makers. Moreover, in considering the relationship between strategists and strategic decisions, the proper unit of analysis was that group of the most influential executives in the organization, referred to as the TMT. These basic assumptions gave rise to three sets of relationships. The first is the relationship between the characteristics of the TMT and the team’s strategic decisions. For example, teams that are more risk averse will make decisions that are generally less risky. The second is the relationship between the decisions of the TMT and the organizational outcomes that result. For example, decisions that are less risky will yield organizational outcomes that are less variable. Finally, because these two relationships are sequential and interconnected, we can ascribe a connection between the characteristics of the TMT and organizational level outcomes. Again for example, a TMT that is more risk averse should produce organizational outcomes that are less variable.

Over many years and across a great many studies, these relationships have been generally supported. In fairness though, all three sets of relationships have not received equal attention. Indeed, very few, if any, studies have sought to test the entire model, and a relative few have tested any relationships involving specific TMT decisions. Instead, the majority of studies have linked an increasingly granular combination of TMT characteristics to various performance measures in very large organizations. Unfortunately, these relationships, the ones ascribed between measurable TMT characteristics and aggregate performance, are perhaps the least interesting in terms of understanding strategic choice. We say the least interesting for two reasons. First, they offer the least nuanced view of how TMTs actually affect organizations. Second, they are the ones most likely to be influenced by other forces, outside of the upper echelon perspective or strategic choice theory.

So, as we reflect upon the upper echelon literature, we come away with two observations. First, we certainly understand a great deal about TMTs, about the behavior of teams under various conditions, about the TMT characteristics that have the strongest connections to various organizational outcomes, and about how various configurations of TMT characteristics affect the teams themselves. What is more, if this is all we ever learn from this stream of literature, then that will have been enough. All of that aside though, we cannot help but read this literature and come away with a growing sense of opportunity missed. To apply an old metaphor, we run the risk of missing the proverbial forest for the trees.

What exactly might we be missing? We are missing the opportunity outlined by Hambrick and Mason (1984) more than 30 years ago. The upper echelon perspective was offered as a lens through which we could view the how and why of top management influence on organizations. Indeed, Child (1972) offered strategic choice as the missing link amidst various explanations of organizational variation. As Child described it, “the theoretical models we reviewed attempt to explain organizational structure at one remove” (1972, p. 16). The models of the day were missing the essential and irreplaceable element of managerial interpretation, valuation, action, and choice. The upper echelon perspective offered a framework by which that essential element could be modeled, understood, and incorporated into explanations of organizational outcomes. What seems to be happening, though, is that history is repeating itself, and the bulk of research in the upper echelon tradition is now operating “at one remove.” And so, while we have a learned a great deal from the work that has been done, there is the risk of losing sight of the big questions and falling short of the original challenge. What can be done about this and what can be done to invigorate this research again? We offer four suggestions.

Remember That All Top Managers Are Not Equal

Drawing into focus the issues mentioned earlier regarding power dynamics and the definition and configuration of the TMT, research has established that not all members of the TMT are equal with regard to their power or role in strategic choice determination. Some recent work has brought new light to our understanding of this, while also pointing the way to potential future areas for valuable research. For example, Roberto (2003) conducted both qualitative and quantitative analyses of TMTs, including multiple interviews with chief executives, and a large sample quantitative survey. Roberto’s findings suggest that a small group of executives, a “stable core,” are involved in nearly all strategic decisions, but that multiple groups convene around this stable core to formulate strategy. Inclusion into this outer group and so into the strategic decision process was based largely upon functional expertise and personal relationships. Often comprising individuals from a variety of levels throughout the organization, this second group is a “dynamic periphery” that, together with the stable core, comprises the TMT.

Further work in this area has been done with regard to “faultlines” within the TMT (for example, see Hutzschenreuter & Horstkotte, 2013; Ndofor, Sirmon, & He, 2015; Van Knippenberg, Dawson, West, & Homan, 2011). Consistent with the conflict literature (Amason, 1996; Amason & Sapienza, 1997), this line of inquiry suggests that varying configurations of constellations of characteristics of TMT members, usually demographic, can produce lines of subgroup distinction strong enough to influence TMT performance or outcomes, often negatively.

While this line of research has established that not all TMT members aligned by title or compensation or listing in company reports has an equal amount of power or decision making influence, it has opened up an interesting area of inquiry into the actual group and team processes that take place in the executive suite. Another potential view of the differences in power and influence in strategic execution among TMT members could be a return glance to the social network literature regarding brokerage and closure strategies (Burt, 2001). Several studies have examined brokerage and closure strategies employed by middle managers (for example, see Balkundi, Kilduff, Barsness, & Michael, 2007; Shi, Markoczy, & Dess, 2009). However, this perspective has not been examined for TMTs and may be helpful to explain the processes of some TMT members. For example, TMT members playing broker roles may participate more in boundary spanning with middle managers in the dissemination of strategy, and with outsiders in the gathering of market information, while TMT members playing closure roles may maintain communication within the TMT as strategy is formulated, or they may form what Roberto (2003) referred to as the stable core.

Further investigation of how TMTs actually engage in the strategic choice and implementation process, and with whom, will refine our understanding of how the TMT actually influences strategic processes and outcomes in firms. These studies also demonstrate that further elucidation is most likely dependent upon rigorous, more difficult, and more time consuming qualitative and mixed-methods research designs.

Focus More on the Process Connecting TMTs to Action

Despite three decades of research on TMTs, little is still known about the actual processes by which TMTs influence actions and performance in firms. A prevalence of cross-sectional studies, studies examining relationships between variables for which data are publicly available in company reports, and studies examining configurations of TMTs that may or may not actually wield influence over strategy, have offered some insight into relationships, but little understanding of actual TMT decision making or strategic integration processes that explain why and how TMTs influence some firms to perform better than others. Much of the TMT research has been focused upon internal interactions within the TMT (for example, the TMT conflict literature) and far less upon integrative processes of strategy implementation, which more directly influences firm performance. Another observation, echoed by Raes, Heijltjes, Glunk, and Roe (2011), is that strategy research has kept executive managers and middle managers, who are often more responsible for integrative implementation processes, distinct from one another in research domains (for exceptions, see Balkundi et al., 2007; Shi et al., 2009). These issues are well understood by TMT researchers, and are often reflected in reviews and “opportunities for future research” sections of journal articles. Similarly, Menz (2012) noted that research on functional members of the TMT and their influence on TMT processes, often finds its way into journals specific to those functional domains (e.g., CFO research often appears in finance journals), unfortunately preventing its integration into general strategic management research on TMTs. One suggestion could be to look beyond TMT behaviors for variance, and into the interaction of the TMT with other dimensions of strategic control besides behaviors, such as political and systemic barriers (Lorange & Murphy, 1984). While TMT research more often examines behavioral aspects of strategic control, more research should investigate political aspects of strategic control (TMT interactions between multiple levels of management and external stakeholders), and systemic issues (TMT interactions with the controls themselves).

Fortunately, recent work has begun to take strides to better examine processes related to TMTs. For example, Carmeli and Schaubroeck (2006) conducted a mixed methods study in which they conducted a quantitative survey of 116 TMTs, followed by a qualitative explanatory study of four of those firms, examining the influence of the behavioral integration of the TMT with the quality of strategic decisions in both growing and declining firms. Their study allowed them to better causally link the mechanisms of TMT behavioral integration, the quality of their strategic decision making, and organizational decline. Ou, Tsui, Kinicki, Waldman, Zhixing, and Jiwen Song (2014) serves as an example of empirical research examining the interaction between TMTs and middle managers. Using both a quantitative study and an exploratory qualitative study, their results suggest that CEO humility relates positively to TMT integration, which also positively influences middle manager commitment and job performance. Studies like these demonstrate the value of mixed methods research designs in examining the deeper processes, which have traditionally remained within the “black box” of the TMT.

Additionally, recent work has begun to examine psychological constructs without heavily relying on demographic variables, instead examining the constructs themselves, and in a variety of contexts. Examples of these studies include research in organizational identity (Clark, Gioia, Ketchen, & Thomas, 2010), information exchange and collaboration (Boone & Hendriks, 2009), and cognitive perceptions (de Luque, Washburn, Waldman, & House, 2008; Nadkarni & Barr, 2008). Clark and colleagues (Clark et al., 2010) conducted a qualitative examination of the organizational identity negotiation processes between TMT members of two firms during a merger. Their research found that a transitional identity allowed more flexibility in creating a new organizational identity as a result of the merger. Boone and Hendriks (2009) conducted interviews with CEOs and surveyed TMTs (with three or more members) of 33 Belgian and Dutch technology companies with regard to collaborative behavior, information exchange, and decentralized decision making. Their findings suggest that collaboration and higher quality information exchange contribute to exploiting the benefits of TMT functional diversity for firm performance. In the study by deLuque and colleagues (deLuque et al., 2008), the CEO-TMT interface was examined through direct surveys in 520 firms in 17 countries, finding that TMT members perceived CEOs to be visionary leaders when CEOs considered stakeholder values more importantly, which led to greater TMT effort and superior performance. These studies offer encouraging evidence that in recent years research has begun to investigate actual TMT processes, rather than proxies, across various cultures and contexts.

Keep an Open Mind About Sample Selection

Most TMT studies draw convenience samples from readily available sources, such as 10-Ks and publicly available company reports and databases. From this data, inferences are drawn about relationships between TMTs and other various constructs. As difficult as it is to draw conclusions about actual linkages between TMTs and organizational outcomes from secondary data collected from public information, it is equally difficult to capture primary data from large numbers of complete TMTs to develop generalizable theory. Few researchers have access to entire executive suites for the purpose of capturing richer data over longer periods of time, pertaining to TMT processes and TMT interaction with middle managers in order to implement strategic decisions. Whenever researchers are fortunate enough to capture longitudinal data or qualitative data from executives (especially beyond the CEO), the samples are often small, and many are limited to single firm, multi-business unit case studies. One notable example is the study by Barkema and Shvyrkov (2007), in which they analyzed three decades of data of TMT interactions in 25 Dutch firms. Using such a long time period of data, and a sample context in which there are strict reporting definitions of the composition of the TMT across firms, allowed them to examine tenure overlaps among TMT members and along potential faultlines. Their results suggested that positive effects of TMT tenure diversity decompose over time as TMT tenures overlap, and also that the negative effects of faultlines break down as TMT tenures overlap.

A helpful start would be more studies capturing and reporting data and findings related to multiple definitional configurations of TMTs. Having this information would allow for greater numbers of meta-analyses to be conducted given various TMT configurations, shedding light on how various coalitions within TMTs influence various kinds of organizational outcomes. A greater number of longitudinal studies, multiple case studies, or studies involving ethnographic methods, would benefit the explanation of causal relationships between TMTs and outcomes.

Keep an Eye on the Big Picture

To paraphrase an old adage, the surest way to lose sight of the big picture is to focus intently on the details, close up. As we have argued, TMT research has, over the past three decades, focused increasingly on the details, close up. And so it makes sense to simply step back and consider the larger picture. As Godfrey and Hill note, “many view the raison d’etre of strategic management research as the generation of normative heuristics” (2000, p. 228). In other words, it is commonly expected that strategic management research should connect back to and offer guidance for organizational performance. If this is somewhat true for all of strategic management research, then it is especially true for work that builds upon the upper echelon perspective. If a firm and its performance is a reflection of its TMT (Hambrick & Mason, 1984), then a better understanding of that TMT should yield better insights into organizational performance.

Unfortunately, such direct, normative implications have been lacking across the balance of upper echelon research. And, while simply calling for greater connection to practice will not suddenly give rise to new and high quality, practical insights, remembering to consider the implications for practice may change the way we view our questions and do our research. So, scholars are encouraged to keep an eye on the big picture. What are we saying to practice when we identify particular effects associated with specific demographic patterns? Are we suggesting, by implication, that TMTs be constructed around the personality characteristics of the CEO, so as to enable better team dynamics? Even if it were a good idea to construct teams in ways that reflect the findings or our research, doing so would be hopelessly impractical, as most individuals and TMTs are already in place, along with the assets, experiences, and commitments connected to them. So, meaningful implications for practice must be more nuanced and subtle. For example, different types of firms and different types of strategies might require different amounts of actual team interaction. Changing the structure of the decision process, as necessary to suit the nature of the context, might be one way to reduce dysfunctional conflict while still enabling a team with a diverse membership. Similarly, developing routines to counter dysfunctional tendencies within a TMT might serve to mitigate dysfunctional processes, such as the constriction of information that often accompanies perceptions of threat (Dutton & Duncan, 1987; Julian & Ofori-Dankwa, 2008).

Implications such as these are potentially valuable to the world of practice and to understanding the value of our research. Certainly TMT researchers would do well to look for opportunities to apply the things they are learning. Doing so would add value to the work itself, but it should also add value to the process overall, by expanding the view of the researcher and by helping to protect against a dysfunctional narrowing of focus.

Where to Go Next?

The upper echelon perspective, and the stream of TMT research that flowed from it, arose in response to a deterministic view of organizational performance that excluded the choices of top management. Population ecology, industrial economics, and institutional theory all offered valuable insights and reliable explanations for firm outcomes. However, they were never able to fully explain the differences between firms. Hence, the field of strategic management evolved from the need to explain, in science and in pedagogy, the variations in performance, structure, and longevity that were so apparent in the marketplace. Strategic choice and the upper echelon view effectively filled the gap by attributing variance to the characteristics of the top managers of the organization.

Paradoxically though, the very phenomenon that TMT research intended to explain was itself a confounding influence in the investigation. The findings of TMT research have proven to be highly contextual, as organizations, their top managers, and the processes by which they implement strategy, are highly idiosyncratic. A number of contextual moderators have been considered in an attempt to improve the explanatory power of TMT research, such as managerial discretion, behavioral integration, environmental munificence, and environmental dynamism, among others. Nevertheless, few relationships between TMTs and their firms have been found to be robust across settings. As a result, we are in danger of ending up right back where we started, with no solid theory of how strategic choice operates and no clear picture of how managerial action contributes to or accounts for firm performance.

So, we return to our original question. Is there new value in this stream or have we reached a point of diminishing returns? The answer really depends upon us. As strategy researchers, we should be interested in the relationships between managerial actions and firm performance. The TMT is a lens through which we can examine, not just how teams operate, but rather how team operations influence firm outcomes. How many TMT studies conclude with a disclaimer about inconsistent findings and the challenges of opening the black box? At its essence, that black box is human choice, worked out through the interpretations and interactions of the dominant coalition. How many TMT studies focus on central tendencies and variations within the team? Perhaps it is time to consider the substance underlying those tendencies and variations. Are some experiences simply better than others? Are some personalities sufficiently strong to overcome the weight of disagreement among the team? Is the TMT itself more or less relevant in the presence of certain types of CEOs (Hambrick & Finkelstein, 1987)? Finally, should we relax the constraints on sample size and purity, in the interest of gaining important new insights? While the quest for efficiency and generalizability in research is understandable, adherence to this orthodoxy limits our ability to view and analyze the important nuances of the model. Hence, we are left again interpreting cause, one step removed from its origins.

Zimmerman, M. A. (2008). The influence of top management team heterogeneity on the capital raised through an initial public offering. Entrepreneurship Theory and Practice, 32(3), 391–414.Find this resource:

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